1. Pharmaceutical Case Competition 2007
HLM Biotech Consulting
Paul Di Capua, MD, MBA candidate
Robert Stavert, MD, MBA candidate
Adrian Garcia, MBA candidate
November 30, 2007

2. WHY BIOTECH ? WHY NOW? Cash reserves Slim pipeline
Pharmaceutical pipeline is drying up
Diversification of drug portfolio into biologics
Potential synergies
WHY
BIOTECH ?
WHY NOW?
Cash reserves
Slim pipeline
Blockbusters are going off-patent
WHY NOW
Old pharmaceutical business model not holding up
Looking at drug market, fraction that is traditional pharmaceuticals is decreasing and fraction that is small molecules is increasing
Analysts estimate Pfizer may lose over 41% of revenues to generic competitors between 2010 and 2012
Lipitor (which accounts for 29% of Pfizer’s revenue) sales have been declining much faster than expected under face of generic competition for statins
2nd quarter sales of lipitor fell more than $400 M (13%) from 2006 to 2007
Other key drugs facing increased generic competition- Norvasc, Zyrtec
Inhalable insulin (Exubera) has been major disappointment
At the start of 2007, Pfizer has eight compounds in phase 3 development; four of them were new indications for already-approved drugs. The remaining four are mostly cancer0targeting drugs that face a very competitive oncology market. They won’t even come close to replacing the billions of dollars Pfizer will soon lose to generic competition.
WHY BIOTECH
Synergies:
R&D development
Marketing
Corporate structure and culture more aligned with current and future of biologics industry
WHY BIOGEN:
MS market
Race for oral MS Tx
Growth of market
Increased control of interferon β 1 market with AVONEX and REBIF
Patent extension through combination drugs
Economies of scale in combining drugs
Marketing and distribution channels already exist for IFN β
Sucessful biotech with proven track record
Growth of MS market
Potential synergies
So competition doesn’t acquire Biogen

3. “When we look back, this will seem a very expensive time.”
– Tony Robinson, Head of Business Development and Licensing at Novartis
Not a favorable market
Seller’s market
Icahn’s bid serves as anchor
Desparate buyers
Press coverage inflates price
‘08 elections will emphasize health care and drug prices
MS research has unpredictable future
Robust pipeline with a lot of competition
Future of MS therapy unknown
Vaccines or cures may dry up MS market for chronic disease
Biotech firms difficult to value
Revenue generators expire with patents
Difficult to valuate pipeline, which represent future value of firm
Buyers beware!
***RISKS***
Overvalued
Icahn’s bid
Anchor
Increased press
Bidding war
Desparate buyer
Overhyped buyee
Seller’s market
Pipeline drugs won’t get approved
Other biotech beats biogen in MS development in targeted mechanisms  mechanism overlap in pipeline
Biotech’s are hard to value
If vaccine approved and effective  will dry up MS market  MS no longer chronic disease
Field of MS may go in other directions
Vaccine
Genes
Stem cells
Reversible effects via other mechanisms
‘08 elections  attention to increased $$ spent on drugs
US health care reform with attention to drug spending, biotech model makes specialized drugs and charges a lot (big pharma has more lobby!)
Biogen is a big biotech  has many other relationships, can complicate deal, increase cost $$
“Pharma companies are desperate for new products, they are prepared to pay huge amounts of money for early-stage compounds and give away geographical rights that would previously have been unthinkable.”
– Simon Maroney, CEO of MorphoSys, German Biotech firm

4. Multiple Sclerosis: Pathogenesis and mechanisms of therapy
Figure from: Compston A, Coles, A. Multiple Sclerosis. Lancet 2002; 359:

5. cost for 1 month of treatment
Current MS therapies
Drug name
molecule & mechanism
firm
patent expiration
route
Notable features
cost for 1 month of treatment
interferon β 1a
2011 IM
Most used of DMT's
$1,395.00
Natalizumab (monoclonal antibody)
2015 IV
• Touch process --> PML • reduces frequency of exacerbations for relapsing forms of MS
$2,225.00
Betaseron
inteferon β 1b
Bayer - Berlex
off patent SC
contraindicated in pregnancy
$1,489.00
glatrimer acetate (mimics myelin sheath)
Teva
2014
safest of main disease modifying drugs (ABCR's)
$1,370.00
Pfizer-Serono
risk of neutropenia and pancytopenia
$1,470.00
mitoxantrone (intercalates DNA, causing DNA damage)
Emd Serono / OSI Pharma
2010
• Unique mechanism of intercalating DNA • risk of cardiotoxicity
$1,453.00
Major risks:
Copaxone safest
Tysabri: touch process; PML
Novatrone: cumulative cardiotoxicity
AVONEX is most used DMT b/c both decrease in relapses and slows accumulation of physical disability
TYSABRI is notable because:
BENEFITS: it delays accumulation of physical disability and reduces frequency of exacerbations for relapsing forms of MS
RISKS: touch process  PML, immunosuppression

6. Prospective MS therapies
Drug name
Firm
Phase
Mechanism
Route
Strategic competitive advantage
Fingolimod
Novartis
III
sphingosine 1-phosphate receptor (S1P-R) modulators
oral
• Oral administration • Novel mechanism of action • May reverse effects of MS
NeuroVax
Immune Response II
T Cell Receptor (TCR) peptide vaccine
monthly injections
Vaccine, complete remission after 1 year
BG-12
fumeric acid ester (FAE) immunomodulator with a combination of cytoprotective and anti-inflammatory properties
oral administration, novel mechanism of immunomodulation
Fampridine-SR
Acorda Therapeutics
Blocks channels from damaged neurons facilitating electrical signal transfer
Oral, offers improvement of symptoms
Rituxan
Anti-CD20 monoclonal antibody IV
Already approved for other indications
Zenapax (daclizumab)
Biogen with PDL BioPharma
Monoclonal antibody that targets IL-2 receptor antibodies
Possible synergistic activity with interferons
Major risks:
Copaxone safest
Tysabri: touch process; PML
Novatrone: cumulative cardiotoxicity
AVONEX is most used DMT b/c both decrease in relapses and slows accumulation of physical disability
TYSABRI is notable because:
BENEFITS: it delays accumulation of physical disability and reduces frequency of exacerbations for relapsing forms of MS
RISKS: touch process  PML, immunosuppression

7. Traditional DCF Method:
Biogen Idec Valuation
Traditional DCF Method:
Discount Rate (3)
13.0%
Assumed EBITDA Exit Multiple
10.0x
20.0x
30.0x
PV of Terminal Value
$ ,235.2
$ ,470.5
$ ,705.7
PV of Free Cash Flows
1,612.7
Implied Enterprise Value
$ ,847.9
$ ,083.1
$ ,318.4
Discount Rate (3)
13.0%
Assumed Perpetual Growth Rate
10.0%
11.0%
12.0%
Terminal Year + 1 Free Cash Flow $ $ $
Terminal Value
21,653.2
32,775.0
66,140.6
PV of Terminal Value
$ ,752.5
$ ,789.0
$ ,898.4
PV of Free Cash Flows
1,612.7
Implied Enterprise Value
$ ,365.2
$ ,401.7
$ ,511.1

8. Valuation by industry multiples and recent acquisitions:
Current
Market Value ($mn)
LTM Multiples
Price
Enterprise Value
Market Cap.
Sales
EBITDA
EBIT
P / E
Bio Gen
69.75
18,195.39
19,098.07
6.78
6.53
7.55
42.27
Amgen
54.02
57,333.94
61,476.94
4.x
4.6x
4.7x
12.7x
Genentech
76.01
81,868.48
82,157.48
8.8x
9.6x
10.1x
29.8x
Genzyme
73.53
4.9x
5.6x
6.4x
167.1x
Gilead
44.49
12.2x
14.x
14.3x
-80.9x
Mean
7.5
8.47
8.87
32.18
Median
6.87
7.63
8.25
21.24
 Industry Multiples
Sales
EBITDA
EBIT
Income
FY 2007E
3,354
911
671
438
Multiples
7.5
8.47
8.87
32.18
Ent. Value
$25,149
$7,711
$5,952
$14,081
Acquisition Multiples 
Sales
EBITDA
EBIT
Income
FY 2007E
3,354
911
671
438
Multiples
11.7
149 NM
Ent. Value
$39,240
$135,733

9. Value of BIOGEN’s MS line of drugs:
DCF Valuation by drug
2006
2007
2008
2009
2010
2011
Market Size
175,000
195,000
215,000
235,000
257,000
281,000
Pentetration Rate
37%
38%
39%
40%
41%
42%
Patients on AVONEX
64,750
74,100
83,850
94,000
105,370
118,020
Sales Price per patient
1,395
1,430
Annual Revenue per patient
16,740
17,159
Total Annual Revnue
1,084
1,271
1,439
1,613
1,808
2,025
Costs
759
890
1,007
1,129
1,266
1,418
Gross Profit
325
381
432
484
542
608
Present Value
$1,769
Value of BIOGEN’s MS line of drugs:
Avonex
$1,769 M
Rituxan
$551 M
Tysabri
$339 M
BG12
$5,908 M
Total value (U.S)
$8,566 M
Total (Worldwide):
$14,277 M

10. Multiple valuations of BIOGEN-IDEC:
Maximum Bid Price: $22b
Industry multiples: $5.9b - $25.1b
Traditional DCF valuation: $11.8b - $37.5b
DCF valuation by drug: $21.4b
Acquisition multiples: $39.2b - $135.7b

11. Make bid of $22b Propose strategic alliance, valued at: $14.3b
Icahn has bid $23b, which is slightly above our valuation
Historical acquisition multiples and current market environment suggest that market is overvalued
Propose strategic alliance, valued at: $14.3b
An alliance for MS line allows both companies to benefit from the synergies
Allows BIOGEN to keep autonomy:
Retains corporate culture and structure of biologics leader
Still benefiting from Pfizer’s economies of scale
Pfizer fills pipeline without overpaying, gets virtual monopoly on IFN-β market
Pass on BIOGEN, acquire smaller biotechs
Current market is overvalued, any big purchase is unwise investment
Seek smaller firms with interesting pipelines in line with current marketing strategy

12. APPENDICES

14. The MS Pipeline: Phase III drugs
Drug name
Firm
Mechanism
Route
strategic competitive advantage
BG-12
Biogen IDEC
fumeric acid ester (FAE) immunomodulator with a novel mechanism of action with a combination of cytoprotective and anti-inflammatory properties
oral Qday
oral administration, novel mechanism of immunomodulation
Campath
Genzyme and Bayer Schering
anti-CD52 monoclonal antibody
Interim results compared Campath very favorably with Rebif
Fampridine-SR
Acorda Therapeutics
Blocks channels from damaged neurons facilitating electrical signal transfer
Oral, offers improvement of symptoms
Revimmune
Accentia Biopharmaceuticals
Using a ultra-high intensity cyclophosphamide, Revimmune is intended to "reboot" a patient's immune system, thereby eliminating autoimmunity
IV infusion for 4hours over for 4 days
improvement of symptoms and possibly complete remission via high-intesity IV cyclophosphamide-mediated "reboot" of immune system
FTY720 (Fingolimod)
Novartis
sphingosine 1-phosphate receptor (S1P-R) modulators - may repair damage
oral
New mechanism of action with potential reversible effects; impact on CNS in addition to well established action on immune cells.
laquinimod
Teva
immunomodulatory effects
would be first oral therapy for MS
MBP8298
BioMS Medical
Re-introduce a state of "tolerance" to a critical portion of the nerve's Myelin Basic Protein
IV 1/6 mos
novel mechanism of action: restores "tolerance" to myelin basic protein; would be one of few therapies targetted at secondary MS;

15. The MS Pipeline: Phase I & II drugs
Drug name
Firm
mechanism
strategic competitive advantage
RTL-1000
Artielle ImmunoTherapeutics
Inactivates pathogenic T cells through binding to them
Novel mechanism, damage reversal
ATX-MS-1467
Apitope (UK)
Vaccination with myelin basic protein (MBP) peptides to sensitize T cells
Novel Mechanism, vaccination
CHR-1103
Chromos Molecular Systems
monoclonal antibody directed against VLA-2
reduce the severity of a relapse; stem the residual neurological damage that often accompanies relapse
RPI-78M
Nutra Pharma Corp
Induces gamma-interferon and IL-27 to suppress auto-inflammatory processes
Novel mechanism
Cyclophosphamide
Generic
intercalating agent
Already approved for other indications
Ibidulast (MN-166)
MediciNova
Inhibits leukotrienes, phosphodiesterases, nitric oxide
Novel mechanism, neuroprotection, oral administration
NeuroVax
Immune response, Corp
an investigational T Cell Receptor (TCR) peptide vaccine for the treatment of relapsing-remitting multiple sclerosis (MS).
vaccine via T cell receptor mechanism
Rituxan
Biogen
Anti-CD20 monoclonal antibody
Zenapax (daclizumab)
Biogen with PDL BioPharma
Monoclonal antibody that targets IL-2 receptor antibodies
Possible synergistic activity with interferons
Cladribine
Merck Serono
Nucleoside analogue that disrupts production of WBCs
oral medication, novel mechanism of action, potential to be first first-line oral approved drug for MS
BHT-3009
Bayhill Therapeutics Inc.
Autoimmune DNA vaccine that encodes MBP. It is designed to reprogram the immune system
vaccine encoding human myelin basic protein
Tovaxin
Opexa Therapeutics
The induction of anti-idiotypic cytotoxic CD8+ effector T-cells and anti-ergotypic CD4+CD25+FoxP3 positive Tregs.

16. Important features of licensing agreement:
Scope of license:
Exclusive/non-exclusive
Transferable/non-transferable
Territory distribution rights
Licensor’s assets
Maintaining of patents
Possible enhancements of licensor’s IP
Fee structure
Paid up-front (unlikely)
Royalties: fixed/volume
Indemnity:
IP infringement
confidentiality breach
Insurance
Assignment rights
- scope of license: exclusive/non-exclusive, transferable/non-transferable, territory
- distribution rights ?
- licensor's maintaining of patents etc.
- possible enhancements of licensor's IP/technology and related property
- fee structure: fully paid-up licence (unlikely), royalties (basis ? fixed/volume/$)
- reps & warranties of licensor: usual r&w + ownership of its licensed IP/technology, GMP compliance, privacy
- indemnity (hold harmless): IP infringement, confidentiality breach, injury/death (due to use of IP/technology)
- need of trademark license ?
- licensor's assistance in case of recall of products based on licensor's IP/technology
- withholding taxes (if licensor is non-Canadian, assuming that licensee is Canadian)
- insurance
- assignment rights

17. 2006 MS market share by firm Post acquisition MS market share by firm
Post acquisition MS market share with synergies
Post acquisition MS market share by firm
2006 MS market share by firm

18. The following slides describe the details of the DCF valuation

19. Projected Fiscal Years Ending Dec. 31,
- DRAFT -
Bio Gen
Income Statement ($ in millions, except per share amounts)
Historical FYE Dec. 31,
Projected Fiscal Years Ending Dec. 31,
2005A
2006A
2007E
2008E
2009E
2010E
2011E
Product
$1,617.0
$1,781.3
$2,226.6
$2,783.3
$3,479.1
$4,348.9
$5,436.1
Unconsolidated Joint Business
$708.9
$810.9
$1,013.6
$1,267.0
$1,583.7
$1,979.6
$2,474.6
Other Revenue
$96.6
$90.9
$113.6
$142.0
$177.5
$221.9
$277.3
Net Sales
$2,422.5
$2,683.0
$3,353.8
$4,192.3
$5,240.3
$6,550.4
$8,188.0
Cost of Goods Sales
(373.6)
(274.4)
(335.4)
(419.2)
(524.0)
(655.0)
(818.8)
Gross Profit
2,048.9
2,408.7
3,018.4
3,773.0
4,716.3
5,895.4
7,369.2
Margin
84.6%
89.8%
90.0%
SG&A and Other
(1,812.8)
(1,968.6)
(2,347.7)
(2,934.6)
(3,668.2)
(4,585.3)
(5,731.6)
Total Costs and Expenses
Depreciation
402.2
375.9
240.2 #
234.1
232.8
237.1
248.2
EBITDA
638.2
815.9
911.0
1,072.6
1,280.9
1,547.1
1,885.8
EBITDA Margin
26.3%
30.4%
27.2%
25.6%
24.4%
23.6%
23.0%
Operating Income
236.0
440.0
670.8
838.5
1,048.1
1,310.1
1,637.6
Operating Income Margin
9.7%
16.4%
20.0%
Interest (Expense)
0.0
(3.4)
(0.7)
Interest Income
20.2
52.1
Other Income (Expenses)
EBT
256.2
492.2
667.4
837.8
Income Tax Expense
(95.5)
(278.4)
(233.6)
(293.2)
(366.8)
(458.5)
(573.2)
Income from Continued Operations
160.7
213.7
433.8
544.5
681.2
851.6
1,064.4
Effect on Acct Change (net of taxes)
3.8
Net Income
$160.7
$217.5
$437.6
$548.3
$685.0
$855.3
$1,068.2
Diluted Shares Outstanding
344.1
342.4
Diluted EPS (1)
$0.47
$0.62
$1.27
$1.59
$1.99
$2.49
$3.11
First Call
$3.36
$3.38
$3.66
$3.93
Dividends Per Share
$0.00
Payout Ratio
0.0% -
Assumed P/E
42.0x
107.3x
Implied Share Price for Repurchase
$26.21
$135.99
$170.70
$213.55
$266.94
$333.68
Shares to Repurchase
0MM Shares
One-Year Average Share Price
$67.00
Implied '03 P/E
(1)
Based on Income from Continued Operations.

20. Projected Fiscal Years Ending Dec. 31,
- DRAFT -
Bio Gen
Balance Sheet ($ in millions)
Historical FYE Dec. 31,
Projected Fiscal Years Ending Dec. 31,
2005A
2006A
2007E
2008E
2009E
2010E
2011E
Cash and Cash Equivalents
$850.8
$902.7
$1,128.4
$1,508.1
$1,957.5
$1,820.0
$2,754.8
Accounts Receivable (net)
280.5
317.4
387.5
472.9
576.8
703.0
856.3
Inventories
182.8
169.1
205.8
256.1
318.7
396.5
493.4
Due from unconsolidated business
141.1
168.7
210.9
263.6
329.5
411.9
514.9
Other current assets
177.7
154.7
193.4
241.7
302.2
377.7
472.1
Total Current Assets
1,632.9
1,712.6
2,125.9
2,742.4
3,484.6
3,709.1
5,091.5
Gross PP&E
1,389.6
1,589.0
Accumulated Depreciation
(214.8)
(308.6)
Net PP&E
1,174.8
1,280.4
1,173.8
1,467.3
1,834.1
2,292.6
2,865.8
Marketable securities
1,204.4
1,412.2
1,765.3
2,206.6
2,758.3
3,447.8
4,309.8
Intangibles
2,975.6
2,747.2
Goodwill
1,130.4
1,154.8
Investments and other assets
264.1
245.6
307.0
383.8
479.7
599.7
749.6
Total Assets
$8,382.1
$8,552.8
$7,508.8
$8,495.5
$9,700.5
$10,503.4
$12,608.9
Accounts Payable
$99.8
$100.5
$122.8
$153.5
$191.9
$239.8
$299.8
Taxes Payable
200.2
145.5
181.9
227.4
284.2
355.3
444.1
Accrued Expenses
297.8
336.9
Total Current Liabilities
597.8
582.9
611.7
764.7
955.8
1,194.8
1,493.5
Notes Payable
43.4
96.7
25.4
0.0
340.5
Long Term deferred tax liablility
762.3
643.6
618.3
958.7
Other Long Term Liabilities
72.3
79.8
Total Long Term Liabilities
878.0
820.2
Common Stock
0.2
Additional Paid-in Capital
8,206.9
8,308.2
Other SE Items, incl. Treasury Stock
(222.8)
(319.7)
Deferred Stock Compensation
(42.9)
Accum. Other Comprehensive Income
(13.9)
21.9
Retained Earnings
(1,021.6)
(860.8)
(423.2)
125.1
810.1
1,665.4
2,733.7
Total Equity
6,905.9
7,149.8
7,587.4
8,135.7
8,820.7
9,676.0
10,744.3
Total Liabilities & SE
$8,381.7
$8,842.7
$9,518.6
$10,394.8
$11,489.1
$13,196.5
Assets-(Liabilities + SE)
0.395
0.000
(1, )
(1, )
( )
( )
( )

21. Projected Fiscal Years Ending Dec. 31,
- DRAFT -
Bio Gen
Cash Flow Statement ($ in millions)
Projected Fiscal Years Ending Dec. 31,
2007E
2008E
2009E
2010E
2011E
Net Income
$437.6
$548.3
$685.0
$855.3
$1,068.2
Depreciation
240.2
234.1
232.8
237.1
248.2
Amortization
0.0
(Increase)/Decrease in Intangibles
(Increase)/Decrease in Investments and other assets
(61.4)
(76.8)
(95.9)
(119.9)
(149.9)
Changes in Working Capital Accounts:
(Increase)/Decrease in Accounts Receivable (net)
(36.8)
(70.1)
(85.4)
(103.9)
(126.2)
(153.3)
(Increase)/Decrease in Inventories
13.7
(36.7)
(50.3)
(62.6)
(77.9)
(96.9)
(Increase)/Decrease in Due from unconsolidated business
(27.6)
(42.2)
(52.7)
(65.9)
(82.4)
(103.0)
(Increase)/Decrease in Other current assets
23.0
(38.7)
(48.3)
(60.4)
(75.5)
(94.4)
Increase/(Decrease) in Accounts Payable
0.7
22.3
30.7
38.4
48.0
60.0
Increase/(Decrease) in Taxes Payable
(54.7)
36.4
45.5
56.8
71.1
88.8
Increase/(Decrease) in Accrued Expenses
39.0
(29.8)
76.8
95.9
119.9
149.9
Total Changes in Working Capital
(42.7)
(158.8)
(83.8)
(101.6)
(123.1)
(148.9)
Change in NWC as % of Sales
1.6%
2.0%
Cash Provided / (Used) by Operating Activities
519.0
698.6
816.2
969.3
1,167.5
Net Capital Spending
(222.0)
(293.5)
(366.8)
(458.5)
(573.2)
Other
Cash (Used) / Provided by Investing Activities
Increase/(Decrease) in Common Equity
Dividends
$0.0
Preferred Dividends
Cash (Used) / Provided by Financing Activities
Net Increase / (Decrease) in Cash Balance
297.0
405.1
449.4
510.8
594.3
Plus: Cash at Beginning of Period
902.7
1,128.4
1,508.1
1,957.5
1,820.0
Cash Available / (Deficit) to Reduce Revolver
1,199.7
1,533.5
2,468.3
2,414.3
Minimum Cash Balance
1,410.5
1,763.1
2,203.8
2,754.8
Cash (Used) / Drawn to Reduce Revolver
(71.3)
(25.4)
340.5
Cash at End of Period
$1,128.4
$1,508.1
$1,957.5
$2,468.3
$2,754.8

22. Projected Fiscal Years Ending Dec. 31,
- DRAFT -
Bio Gen
Projections Assumptions ($ in millions)
Historical FYE Dec. 31,
Projected Fiscal Years Ending Dec. 31,
2005A
2006A
2007E
2008E
2009E
2010E
2011E
Income Statement
Net Sales Growth
10.8%
25.0%
Cost of Goods Sales % of Net Sales
15.4%
10.2%
10.0%
SG&A and Other % of Net Sales
74.8%
73.4%
70.0%
Interest on Cash Balance
6.1%
5.9%
4.0%
Effective Interest on Total Debt
0.0%
5.5%
Effective Tax Rate
37.3%
56.6%
35.0%
Balance Sheet
Minimum Cash Balance
$850.8
$902.7
$1,128.4
$1,410.5
$1,763.1
$2,203.8
$2,754.8
Min Cash Balance as % of Sales
35.1%
33.6%
Accounts Receivable Days
42.3
43.2
42.2
41.2
40.2
39.2
38.2
Inventory Days
178.6
224.9
223.9
222.9
221.9
220.9
219.9
Inventory Turns
2.0
1.6
1.7
Accounts Payable Days
97.5
133.6
Due from unconsolidated business % of Net Sales
5.8%
6.3%
Other current assets % of Net Sales
7.3%
Total Current Assets % of Net Sales
67.4%
63.8%
Net PP&E % of Net Sales
48.5%
47.7%
Marketable securities % of Net Sales
49.7%
52.6%
Intangibles % of Net Sales
122.8%
102.4%
Goodwill % of Net Sales
46.7%
43.0%
Investments and other assets % of Net Sales
10.9%
9.2%
Taxes Payable % of Net Sales
8.3%
5.4%
Accrued Expenses % of Net Sales
Total Current Liabilities % of Net Sales
Notes Payable % of Net Sales #
Long Term deferred tax liablility % of Net Sales
4.1%
3.7%
Other Long Term Liabilities % of Net Sales
Total Long Term Liabilities % of Net Sales
12.3%
12.6%
Cash Flow Statement
Capital Spending (1)
($318.4)
($198.3)
($222.0)
($293.5)
($366.8)
($458.5)
($573.2)
Sale of PP&E
408.1
74.2
0.0
Net Capital Spending
$89.8
($124.1)
% of Sales
13.1%
7.4%
6.6%
7.0%
PPE
1,174.8
1,280.4
1,173.8
1,467.3
1,834.1
2,292.6
2,865.8

23. Projected Fiscal Years Ending Dec. 31,
Depreciation/Tax/Interest Rate Schedules ($ in millions)
GAAP Depreciation
Average Remaining Life of Existing PP&E
10.0
Existing Net PP&E
$1,280
Annual
1st Year
Projected Fiscal Years Ending Dec. 31,
Year
$ CapEx
Life
Depreciation
Convention
2007E
2008E
2009E
2010E
2011E 1 2 3 4 5
CapEx Schedule
$222.0 15
$14.8
0.5
$7.40
$293.5
$19.6
$9.8
$366.8
$24.5
$12.2
$458.5
$30.6
$15.3
$573.2
$38.2
$19.1
Depreciation of New PP&E
7.4
24.6
46.6
74.1
108.5
Plus: Depreciation of Existing PP&E
232.8
209.5
186.2
163.0
139.7
Total Book Depreciation
$240.2
$234.1
$232.8
$237.1
$248.2
Calculation of Interest on Debt
2006A Weighted Average Interest Rate
Rate
Amount
Weight
5.5%
#DIV/0!
(1)
Effective tax rate based on published research.
- 1 -

24. Projected Fiscal Years Ending Dec. 31,
Summary Financials ($ in millions, except per share amounts)
Historical FYE Dec. 31,
Projected Fiscal Years Ending Dec. 31,
CAGR
2005A
2006A
2007E
2008E
2009E
2010E
2011E E
Operating Statistics 1 2 3 4 5 6 7
Net Sales
$2,422.5
$2,683.0
$3,353.8
$4,192.3
$5,240.3
$6,550.4
$8,188.0
25.0%
Gross Profit
2,048.9
2,408.7
3,018.4
3,773.0
4,716.3
5,895.4
7,369.2
25.1%
Operating Income
236.0
440.0
670.8
838.5
1,048.1
1,310.1
1,637.6
30.1%
Income from Continued Operations
160.7
213.7
433.8
544.5
681.2
851.6
1,064.4
37.9%
Diluted EPS (1)
0.47
0.62
1.27
1.59
1.99
2.49
3.11
EBITDA
638.2
815.9
911.0
1,072.6
1,280.9
1,547.1
1,885.8
18.2%
Capital Spending
318.4
198.3
222.0
293.5
366.8
458.5
573.2
23.6%
Free Cash Flow (EBITDA - Capital Spending)
319.9
617.6
689.0
779.1
914.1
1,088.6
1,312.6
16.3%
Growth Rates
10.8%
17.6%
25.3%
86.4%
52.4%
27.8%
11.7%
17.7%
19.4%
20.8%
21.9%
93.1%
11.6%
13.1%
17.3%
19.1%
20.6%
Margins
89.8%
90.0%
16.4%
20.0%
8.0%
12.9%
13.0%
30.4%
27.2%
25.6%
24.4%
23.0%
20.5%
18.6%
17.4%
16.6%
16.0%
Leverage / Credit Statistics
EBITDA / Total Interest Expense
#DIV/0!
271.3x
1,536.4x
FCF / Total Interest Expense
205.2x
1,116.0x
Average Total Debt / EBITDA --
1.0x
0.8x
0.6x
0.5x
0.4x
Debt / Total Capital (Book)
10.5%
9.6%
8.6%
7.3%
6.4%
5.9%
7.6%
Net Debt / Total Capital (Book)
0.3%
-1.0%
-6.5%
-10.5%
-13.8%
-11.4%
-14.2%
Operating Returns
Net Sales / Assets (Average)
31.7%
41.8%
57.6%
64.8%
70.9%
Operating Income Return on Assets (Average)
5.2%
8.4%
11.5%
14.2%
Return on Equity (Average) (1)
3.0%
6.9%
9.2%
10.4%
(1)
Based on Income from Continued Operations
- 1 -